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Looking back in anger? Retirement and unemployment scarring

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  • Hetschko, Clemens
  • Knabe, Andreas
  • Schöb, Ronnie

Abstract

Previous studies find that past unemployment reduces life satisfaction even after reemployment for non-monetary reasons (unemployment scarring). It is not clear, however, whether this scarring is only caused by employment-related factors, such as worsened working conditions, or increased future uncertainty as regards income and employment. Using German panel data, we identify non-employment-related scarring by examining the transition of unemployed people to retirement as a life event after which employment-related scarring does not matter anymore. We find evidence for non-employment-related non-monetary unemployment scarring for people who were unemployed for the first time in their life directly prior to retirement, but not for people with earlier unemployment experiences.

Suggested Citation

  • Hetschko, Clemens & Knabe, Andreas & Schöb, Ronnie, 2014. "Looking back in anger? Retirement and unemployment scarring," Discussion Papers 2014/11, Free University Berlin, School of Business & Economics.
  • Handle: RePEc:zbw:fubsbe:201411
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    Keywords

    unemployment scarring; life satisfaction; retirement;

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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